The Dynamic Effects Of Bank Rebranding And Familiarity Bias

We analyze the dynamic effects of bank rebranding in a sample of Turkish banks. We hypothesize that bank rebranding resorts positive effects if the rebranding strategy exploits familiarity bias, which refers to the behavioral heuristic that investors favor firms they are more familiar with. We measure the effect of bank rebranding on depositor attitudes by the change in depositor discipline. In line with our hypothesis, rebranding from a foreign into a Turkish name (increased familiarity) is associated with reduced depositor discipline, while rebranding from a Turkish into a foreign name (reduced familiarity) is associated with increased depositor discipline instead. Local projections indicate that the positive familiarity bias effect of rebranding lasts up to four years.